Fed's New Chair: Powell Stays, Conflicts Loom

Summary

Kevin Worsh is the new Fed chair, and in an unusual move not seen since nineteen forty-eight, former chair Jerome Powell remains on the board of governors. This dynamic could create interesting policy clashes as Worsh aims to restore Fed credibility and manage inflation, while Powell, who some believe stayed on to spite President Trump, may exert his own influence. Worsh has indicated a shift away from buying mortgage-backed securities and treasuries, preferring market-driven approaches, and plans to reduce Fed communication by potentially eliminating post-meeting press conferences and the 'dot plot'. He also proposes changes to how inflation is measured, suggesting the removal of outliers, and wants the Fed to be less data-driven and more focused on real-world economic conditions and what people are experiencing. Fed independence, according to Worsh, is not assumed but must be earned by hitting benchmarks. Powell is given a mixed grade for his tenure, with some critics citing delayed reactions to inflation and a disconnect from Main Street concerns, while others praise his ability to stand up to presidential pressure.